June 16, 2021 What to expect in Washington (June 16) Infrastructure talks — President Biden has a much-anticipated meeting today (Wednesday, 6/16) with Russian President Vladimir Putin at an 18th century Swiss villa in Geneva. The meeting is expected to last four or five hours; the two leaders will not share a meal, and few concrete policy announcements are expected from the session. Back home, a bipartisan group of Senators continues to grind away at a compromise infrastructure proposal, with the text of their counteroffer to the President possibly being released today. The White House insisted on Tuesday that there was no deadline for talks to conclude, though after a meeting with White House counselor Steve Ricchetti on Tuesday, House Budget Committee Chairman John Yarmuth (D-KY) said the administration was "giving it a week or 10 days and then we move along with [budget] reconciliation." Progressive Democrats grew restive, though, with some threatening to oppose a bipartisan agreement on "hard infrastructure" unless it came with assurances that all 50 Senate Democrats would support a more ambitious effort done through the reconciliation process, which requires only 51 votes to pass. Senate Majority Leader Chuck Schumer (D-NY) said Democrats would begin work on that process while the bipartisan track is playing out. Schumer is reportedly meeting with the Senate Budget Committee's 11 Democrats today in part to discuss the work of starting the reconciliation process on a bill that would include climate change provisions, support for caregivers, and tax increases on corporations and wealthy individuals. Senate Budget Committee Chairman Bernie Sanders (I-VT) said any deal must be offset by a package of "progressive taxation." Chairman Yarmuth on Tuesday said he was confident House Democrats will have the votes to proceed with a budget resolution to begin the reconciliation process, and Rep. Earl Blumenauer (D-OR) said Democrats from the House Ways and Means Committee had met Monday to discuss tax increases to pay for a bill, Bloomberg reported. Among Senate Republicans, the five GOP members of the bipartisan group spent part of Tuesday briefing the full Republican caucus on their proposal. Sen. Romney told reporters he is "very optimistic we'll get at least 10 Republicans to support the plan." Romney said the plan's top-line spending total is $579 billion, with $578 billion in pay-fors. Sen. Jon Tester (D-MT) affirmed that a provision indexing the gas tax, which is controversial for many members, remains in the package. Sen. Bill Cassidy (R-LA), one of the group of 10, said it should be clear by next week if a deal can be made: "I don't think this is going to hang out there forever, whether we are able to get people on board or not." The Senate is set to leave town on June 24 for the Independence Day recess for almost three weeks. House floor - The House today is expected to consider a package of measures (HR 1187) intended to improve corporate governance by requiring a number of new disclosures, including public country-by-country reporting of corporate tax information. Under the "CbCR" provision of the package, based on HR 3007, sponsored by Rep. Cindy Axne (D-IA) and Sen. Chris Van Hollen (D-MD), certain multinational companies would have to disclose the tax jurisdictions where each subsidiary resides for tax purposes, and any other jurisdictions where subsidiaries are organized or incorporated. Companies would also have to disclose aggregate or consolidated financial activities for each tax jurisdiction where a subsidiary resides, including revenue generated from transactions with other business units; profit or loss before income tax; total income tax paid on a cash basis to all jurisdictions; and total accrued tax expenses recorded on taxable profits or losses. The disclosure requirement would apply if "the multinational enterprise group of which the issuer is a member has annual revenue … of not less than an amount determined by the [SEC] to conform to U.S. or international standards for country-by-country reporting." The existing revenue threshold for confidential CbC reporting to the IRS is $850 million in annual revenues. A staff summary of HR 1187 is attached below. The package is expected to pass the House but is opposed by Republicans and would almost certainly have to surpass a 60-vote threshold in the Senate if considered under regular order, an unlikely scenario. Democrats conceivably could include the tax reporting and other disclosures in a 51-vote budget reconciliation bill, but their lack of substantial revenue or spending effects would subject them to being challenged under the "Byrd rule." Other measures in the House package would require public companies to disclose:
Text of HR 1187 is available here. Tax - Senate Finance Committee Chairman Ron Wyden (D-OR) on Tuesday said he is preparing a bill modifying the temporary deduction of up to 20% for partnerships under IRC Section 199A, limiting the tax break for wealthier individuals while expanding it to more businesses. The break was a feature of the 2017 Tax Cuts and Jobs Act (TCJA). Wyden's proposal reportedly would start phasing out the deduction for people earning more than $400,000 in annual business income, making it unavailable to those earning over $500,000. But Wyden's approach would also expand the deduction to cover businesses such as attorneys, accountants or physicians making above certain income thresholds. The bill also will have language aimed at simplifying how the deduction is claimed. In a statement, Wyden said, "I'm looking at ways to revamp the deduction to ensure it's not just a giveaway to the top. For example, phasing out the deduction at high-income thresholds would allow us to fix the problems with the deduction for middle-class small-business owners, including making more of them eligible by ending industry carve-outs." Wyden said imposing the cap would raise tens of billions to help offset the cost of expanding the Child Tax Credit, federal child care subsidies and paid medical leave. The bill is still being drafted and expected to be formally introduced in the next few weeks. Separately, Wyden on Tuesday expressed skepticism that the bipartisan infrastructure talks would produce a viable agreement, telling the New York Times, "The real purpose of this [negotiation] is just to prevent any efforts to deal with those issues of human infrastructure, child care and the mega-corporations and the most affluent paying their fair share." IRS whistleblower bill - Sen. Wyden and Sen. Chuck Grassley (R-IA), the Ranking Member on the Finance Committee, on Tuesday introduced a bill making changes to an IRS whistleblower program, which the two said has already enabled the IRS "to collect over $6 billion from wealthy individuals and businesses caught dodging taxes." The bill would change how the U.S. Tax Court reviews whistleblower awards on appeal; exempt award money from budget sequestration; and instruct the Tax Court to give the presumption of anonymity (rather than allowing judges to use their discretion). The bill also provides for maximum awards to whistleblowers whose information leads to the recovery of unpaid taxes and would require the IRS would to give Congress an annual list of the top 10 areas of tax avoidance as identified by whistleblowers. Bill summary available here. Legislative text available here. Friday, June 18 (12:00 p.m. ET) is the EY Webcast, "Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments." Register ———————————————
——————————————— HR 1187 text
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